Bes Stocks To Buy 2014, Best Stocks For 2014: 5/25/14

Saturday, May 31, 2014

Calvert CEO Barbara Krumsiek to Step Down

Calvert Investments Inc., a socially responsible investing mutual fund firm, announced that its president and CEO, Barbara Krumsiek, will vacate those positions by year end, though she will remain chairwoman of the Calvert board. In addition, she will become the first chairwoman of the newly created Calvert Institute, which is designed to “promote the growth of sustainable and responsible investing (SRI) through research, advocacy and fostering innovation in the field of sustainable investing,” according to a company statement. The institute will begin operations on Jan. 1.

The search for Krumsiek’s replacement as CEO will be led by Executive Vice President Bill Lester of Ameritas Holding Co., parent company of Calvert Investments. In the same statement, Lester noted that under Krumsiek’s tenure Calvert’s AUM tripled, to more than $13 billion as of April 30, while helping to bring “sustainable and responsible investment strategies” to both individual and institutional investors, particularly in 401(k)s.

Krumsiek, 61, said that leading the new institute will allow her “to pursue what I am personally passionate about — promoting corporate social responsibility throughout the world to secure a better future for generations to come.”

Krumsiek joined Calvert in 1997 as president and CEO and has long been a leader in the SRI space. She spent three years as co-chair of the U.N. Environment Programme-Finance Initiative and also developed the Calvert Women’s Principles, a global code of corporate conduct focused on women.

Speaking of the Principles in 2010, Krumsiek said “In order for companies to reach their full potential, they must create an environment in which women are treated equally, where they hold key leadership positions, and are full participants in decision making.”

(Calvert Investments puts its human capital money where its mouth is: "We have a policy of actively hiring and promoting women and minorities and our workforce reflects a 33% minority representation," it reports on its website.)

She has received numerous honors over the year for her pioneering work, including being named twice to ThinkAdvisor’s Top Women in Wealth list (in 2009 and again in 2010).

---

Check out The Right Mix: SRI Investing, Sustainability on ThinkAdvisor.

Friday, May 30, 2014

Deutsche Bank Raises Price Targets on Wynn Resorts, Las Vegas Sands (WYNN, LVS)

Deutsche Bank analysts raised their price target on Wynn Resorts, Limited (WYNN) and Las Vegas Sands (LVS) on Wednesday due to continued strength in Macau gaming.

The analysts rate WYNN as “Buy” and now see shares reaching $190, up from the previous target of $156. This new price tar

Wednesday, May 28, 2014

Amazon struggle with Hachette may be protracted

Breaking its customary corporate silence, Amazon has launched a defense against a rising chorus of criticism about its decision to limit the supply of books from publisher Hachette Book Group and warned that the tussle could be protracted.

In a statement posted on its website Tuesday, Amazon acknowledged that its pricing negotiations have dragged on and lauded Hachette for operating in "good faith." But the Seattle-based retailer told customers that it's "not optimistic that this will be resolved soon."

"Despite much work from both sides, we have been unable to reach mutually acceptable agreement on terms," Amazon said.

Hachette's books have largely been removed from Amazon's shelves. Amazon is ordering new inventories from Hachette only after customers place orders, curtailing authors' incomes and the usually rapid delivery cycle that the site's fans enjoy.

Amazon is no longer taking pre-orders on summer and fall titles, allowing customers to place an order only after books are released.

Amazon said it's seeking "equitable terms" in pricing, and its tactics are no different than those of big-box retailers that keep only a few copies on hand and choose certain titles to display prominently at the front of their stores.

"Suppliers get to decide the terms under which they are willing to sell to a retailer," it said. "It's reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly."

Amazon is in a similar fight with a publisher in Germany, the Bonnier Media Group.

Amazon and its CEO, Jeff Bezos, usually reluctant to talk to the press, remained silent after The New York Times first reported the retailer's cutback earlier this month. Its reluctance to respond contributed to the developing narrative of an intractable and inscrutable giant running roughshod over a supplier.

The imbroglio affects only about 1% of Amazon's inventory. But that the popular titles from the fourth-largest U.S. book pu! blisher — home of James Patterson and four of the top 10 titles in the New York Times' current hardcover fiction bestseller list — could be removed so quickly seemed to confirm publishers' worst fears about Amazon's expansive sway over the book business.

Michael Pietsch, CEO of Hachette urged authors and customers to be patient during this "difficult situation."

"Please know that we are doing everything in our power to find a solution," he said in a letter to authors. "I know this is not a comfortable situation for most of you."

As the stalemate persists, other retailers are seeking to take advantage. Books-a-Million, a chain with 258 stores nationwide, is offering 30% discounts on some upcoming Hachette titles.

While Amazon has branched out to digital media and tablets to boost profit, it still relies heavily on books and electronics for revenue. Its profit margins have always been thin, which is both a result of and an explanation for Amazon's ceaseless drive to extract the best prices possible from manufacturers and middlemen. In the first quarter, Amazon's revenue grew 23% to $19.7 billion but its profit margin is less than 1%. Its quarterly net profit totaled $108 million, up from $82 million a year earlier.

Hachette, whose holdings include Little, Brown and Company, is a subsidiary of Lagardère, a French media conglomerate that had about $9.8 billion in net sales last year.

Exit Strategy - John Hussman

The S&P 500 set a marginal new high on Friday, in the context of a broad rollover in momentum thus far this year that we view as likely – though of course not certain – to represent a broad cyclical peak of the sort that we observed in 2000 and 2007, as distinct from spike-peaks like 1987. Valuation measures remain extreme, with the market capitalization of nonfinancial stocks pushing 130% of GDP (relative to a pre-bubble norm of about 55%), the S&P 500 price/revenue ratio at 1.7, versus a pre-bubble norm of 0.8, and the Shiller P/E near 26 – which while lower than the 2000 extreme, exceeds every pre-bubble observation except for a few months approaching the 1929 peak. We presently estimate 10-year nominal total returns for the S&P 500 Index averaging just 2.3% annually, with zero or negative total returns on every horizon shorter than about 7 years.

A side note about valuations and profit margins – my concern about record profit margins here is emphatically not centered on what profit margins may do over the next few quarters or years. The relationship between cyclical movements in earnings and stock prices is simply not very strong. Rather, as I noted in The Coming Retreat in Corporate Earnings, "my present concern is much more secular in nature. It can be expressed very simply: investors are taking current earnings at face value, as if they are representative of long-term flows, at a time when current earnings are more unrepresentative of those flows than at any time in history. The problem is not simply that earnings are likely to retreat deeply over the next few years. Rather, the problem is that investors have embedded the assumption of permanently elevated profit margins into stock prices, leaving the market about 80-100% above levels that would provide investors with historically adequate long-term returns."

In other words, we should not be concerned about extremely elevated profit margins because earnings are likely to weaken and stock prices might follow over the next couple of years (although that may very well occur). We should be concerned because investors are pricing stocks as a multiple of current earnings. They are implicitly using current earnings as if they are representative and proportional to theentire stream of future earnings going out over the next five decades or more. That's what it means to use a valuation multiple. It means that you take some fundamental as a sufficient statistic for the stream of cash flows that the security will deliver into the hands of investors for decades to come. If you think you know what wage rates, competitive pressures, interest rates and tax policy will be 10, 20, 30, 40 and 50 years from now, and that the present situation is representative and permanent, good luck with that. Otherwise, investors should recognize that because of the variability of profit margins over the long-term, valuation measures that adjust for variations in profit margins have been dramatically more reliable than unadjusted measures over time (see Margins, Multiples, and the Iron Law of Valuation)

Low volatility and suppressed short-term interest rates are a breeding ground for yield-seeking speculation. This reach for yield has now driven junk bond yields to about 5%, which is interesting given that yields are now near or below typical historical default rates. Meanwhile, the majority of new debt issuance today is taking the form of leveraged loans to already highly-indebted borrowers, with "covenant lite" features that provide little recourse in the event of default. This is the sort of behavior that should wake investors up like a triple Espresso. It doesn't because they have been conditioned to focus on yield alone, without considering the minimal amount of capital loss that would wipe that yield out. This is not a new dynamic, and precisely because it is not a new dynamic, one can always find solace from the same Broadway kick-line of dancing clowns that reassured investors that credit was sound, subprime was contained, and stocks were still cheap in 2000 and 2007.

Meanwhile, overbought measures also remain extreme, as investors have become conditioned to a perpetually diagonal advance like those that brought stocks to similarly overvalued, overbought, overbullish pinnacles throughout history (see The Journeys of Sisyphus). As I've often noted, there are countless ways to operationalize the concept of "overvalued, overbought, overbullish" depending on the severity of the condition one wishes to capture. Conditions that capture less severe market peaks also tend to include various false signals, while more restrictive conditions limit the set to the worst pre-crash peaks in history, but will tend to miss cyclical peaks that were less extreme). The following set of criteria falls into the more restrictive category, and limits the set to the 1929, 1972, 1987 peaks, three tech-bubble instances (the peak before the 1998 Asian crisis, a pre-correction peak in 1999, and the 2000 top), the 2007 peak, and of course, a solid band of warnings today. From our perspective, this time is different only in the extended period over which these and similar conditions have been sustained in recent quarters without consequence.

Continue reading here.

Also check out: John Hussman Undervalued Stocks John Hussman Top Growth Companies John Hussman High Yield stocks, and Stocks that John Hussman keeps buyingAbout the author:Canadian Valuehttp://valueinvestorcanada.blogspot.com/

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Compuware Corporation (CPWR) Q4 Earnings Preview: Tough Mix for A Beat

Compuware Corporation (NASDAQ:CPWR) will report results for its fourth quarter and full-year fiscal 2014 -- ended March 31, 2014 -- after market-close on May 22, 2014. The company will also hold a conference call to discuss these results at 5:30 p.m. Eastern time on May 22.

Wall Street anticipates that Application Software company will earn $0.08 per share for the quarter, which is $0.03 more than last year's profit of $0.05 per share. iStock expects Compuware to hit Wall Street's consensus number, the iEstimate is $0.08, too.

Sales, unlike earnings, are expected to fall, slipping 12% year-over-year (YoY). Compuware's consensus revenue estimate for Q4 is $211.23 million, which is less than last year's $239.92 million.

[Related -Stocks End Lower After Bernanke Testimony; Zale (ZLC) Surges]

Compuware Corporation delivers services, software and practices that enables technologies to perform at their peak. The Company delivers these solutions through software that is installed and run on its customers' owned hardware and applications (on-premises) and through a Software-as-a-Service (SaaS) model accessed via its hosted networks (Technology and Network Operations section).

CPWR has done a solid job managing Wall Street's expectations. Earnings bypassed the street's consensus outlook eight of the last 16 quarters; hit the target five times and fell short just three occasions.

The average bullish surprise was 22.83% more the forecasted with a range of 9.09% to 50% above consensus. Meanwhile, the trifecta of misses were -9.09%, -16.67%, and -20.00% less than projected.

[Related -Futures Rise Before Bernanke Testimony; Netapp (NTAP) Gains]

While surprises were lopsided towards bullish beats, EPS-driven price sensitivity is symmetrical with shares rising and falling eight times each. The average green reaction added 4.85% to the stock in the days surrounding the announcement while the average loss was -4.76% - symmetry.

Looking at the tech company's most recent financial statement, the most glaring problem is falling sales, obviously. In order for earnings to rise while sales slide, CPWR will need to cut costs to increase margins.

Based on Q3's 10-Q, that ain't happening. In the last quarter, sales dipped a modest -2.85% while total operating expenses moved higher by a slim 1.1%. These numbers need to be heading in the opposite direction.

Overall: Compuware Corporation's (NASDAQ:CPWR) rising costs, however so slight, while sales fall could make it difficult for CPWR's bottom-line to increase while the top-link shrinks.

Monday, May 26, 2014

Production halt for India's iconic Ambassador

An Ambassador taxi on the streets during monsoon rain in Kolkata.

HONG KONG (CNNMoney) Hindustan Motors has suspended production of its iconic Ambassador model amid growing financial pressure and low demand for the car.

Once the vehicle of choice for Indian politicians and bureaucrats, the Ambassador's design was borrowed from Britain's Morris Oxford. The car's look hasn't changed much since the 1950's, making it one of the most enduring sights on India's streets.

While the car's popularity has diminished greatly in recent years, the Ambassador is still used today as a taxi in several Indian cities including Kolkata. Last year, the Ambassador was named world's best taxi by the popular BBC show Top Gear.

The suspension of work at Hindustan Motors' Uttarpara production facility, where the Ambassador is built, has thrown the model's future into doubt. Only a few thousand of the cars are sold each year.

The company said in a stock market filing that it was working to fix substantial problems at the factory located near Kolkata.

"The Company has been transparent in sharing updates about the worsening conditions at its Uttarpara Plant which include very low productivity, growing indiscipline, critical shortage of funds, lack of demand for its core product, the Ambassador, and large accumulation of liabilities," the statement said.

Hottest cars at the NY Auto Show

Rajiv Saxena, a company spokesman, said that the suspension of work at the factory did not mean permanent closure.

"We have suspended operations to set things right for revival," he ! said.

-- CNN's Ravi Agrawal contributed reporting from New Delhi.

Seven states running out of water

The United States is currently engulfed in one of the worst droughts in recent memory. More than 30% of the country experienced at least moderate drought as of last week's data.

In seven states drought conditions were so severe that each had more than half of its land area in severe drought. Severe drought is characterized by crop loss, frequent water shortages, and mandatory water use restrictions. Based on data from the U.S. Drought Monitor, 24/7 Wall St. reviewed the states with the highest levels of severe drought.

In an interview, U.S. Department of Agriculture (USDA) meteorologist Brad Rippey, told 24/7 Wall St. that drought has been a long-running issue in parts of the country. "This drought has dragged on for three and a half years in some areas, particularly (in) North Texas," Rippey said.

While large portions of the seven states suffer from severe drought, in some parts of these states drought conditions are even worse. In six of the seven states with the highest levels of drought, more than 30% of each state was in extreme drought as of last week, a more severe level of drought characterized by major crop and pasture losses, as well as widespread water shortages. Additionally, in California and Oklahoma, 25% and 30% of the states, respectively, suffered from exceptional drought, the highest severity classification. Under exceptional drought, crop and pasture loss is widespread, and shortages of well and reservoir water can lead to water emergencies.

Drought has had a major impact on important crops such as winter wheat. "So much of the winter wheat is grown across the southern half of the Great Plains," Rippey said, an area that includes Texas, Oklahoma, and Kansas, three of the hardest-hit states. Texas alone had nearly a quarter of a million farms in 2012, the most out of any state, while neighboring Oklahoma had more than 80,000 farms, trailing only three other states.

In the Southwest, concerns are less-focused on agriculture and more on reservoir levels, expl! ained Rippey. In Arizona, reservoir levels were just two-thirds of their usual average. Worse still, in New Mexico, reservoir stores were only slightly more than half of their normal levels. "And Nevada is the worst of all. We see storage there at about a third of what you would expect," Rippey said.

The situation in California may well be the most problematic of any state. The entire state was suffering from severe drought as of last week, and 75% of all land area was under extreme drought. "Reservoirs which are generally fed by the Sierra Nevadas and the southern Cascades [are] where we see the real problems," Rippey said. Restrictions on agricultural water use has forced many California farmers to leave fields fallow, he added. "At [the current] usage rate, California has less than two years of water remaining."

The U.S. Drought Monitor is produced by the U.S. Department of Agriculture, the National Oceanic Atmospheric Administration (NOAA), and the National Drought Mitigation Center at the University of Nebraska-Lincoln. 24/7 Wall St. reviewed the seven states with the highest proportions of total area classified in at least a state of severe drought as of May 13, 2014. We also reviewed figures recently published by the USDA's National Agricultural Statistics Service as part of its 2012 Census of Agriculture.

These are the seven states running out of water.

7. Texas

> Pct. severe drought: 56.1%
> Pct. extreme drought: 39.9% (4th highest)
> Pct. exceptional drought: 20.7% (3rd highest)

Much of north and central Texas, including all of the Texas Panhandle, was covered in exceptional drought as of last week. In all, almost 40% of land area in the state experienced extreme drought conditions. Recently, some have said the heavy use of water in natural gas fracking processes in North Texas is problematic during the area's drought. Additionally, the drought could have a large impact on the state's agriculture industry. Texas had nearly a quarter of a milli! on farms,! the most out of any state in the nation, as of 2012.

MORE: The 10 most polluted cities in America

6. Oklahoma

> Pct. severe drought: 64.5%
> Pct. extreme drought: 50.1% (2nd highest)
> Pct. exceptional drought: 30.4% (the highest)

Severe drought covered over 50% of Oklahoma as of last week, up from roughly 33% one year ago. The state's drought worsened from the middle of April, when just 27% of the state experienced severe drought. The state's 80,000-plus farms and nearly 310,000 hired farm workers have been struggling with the drought conditions. The situation is all the more difficult because the state is supposed to be in the midst of its rainy season. An open burn ban is in effect for the western part of the state due to fire hazards resulting from the drought. In March, the Oklahoma Emergency Drought Relief Commission awarded more than $1 million to several drought-ridden communities in the state.

5. Arizona

> Pct. severe drought: 76.3%
> Pct. extreme drought: 7.7% (9th highest)
> Pct. exceptional drought: 0.0%

Unlike other states suffering the most from drought, none of Arizona experienced exceptional drought. Severe drought conditions, however, engulfed more than three-quarters of the state as of last week. While dry conditions are not particularly unusual in Arizona at this time of year, the U.S. Drought Monitor accounts for local seasonal patterns in assessing drought conditions. Moreover, the extreme heat and lighter-than-average snowfall from the winter have reduced the soil moisture to such a degree that fire hazards are significantly higher.

MORE: America's nine most damaged brands

4. Kansas

> Pct. severe drought: 80.8%
> Pct. extreme drought: 48.1% (3rd highest)
> Pct. exceptional drought: 2.8% (6th highest)

Like several states running out of water, 80% of Kansas was engulfed in at least severe drought, an increase from one year ago when roughly 70% was covered by severe drough! t. Compar! ed to last May, however, when exceptional drought covered nearly one fifth of the state, just 2.8% of Kansas was considered exceptionally dry as of last week. In announcing the severity of the state's drought problem, Kansas Governor Sam Brownback lifted restrictions on taking water from state-owned fishing lakes.

3. New Mexico

> Pct. severe drought: 86.2%
> Pct. extreme drought: 33.3% (6th highest)
> Pct. exceptional drought: 4.5% (5th highest)

More than 86% of New Mexico was covered in severe drought as of last week, more than any state except for Nevada and California. Additionally, one-third of the state was in extreme drought, worse than just a month earlier, when only one-quarter of the state was covered in extreme drought. However, conditions were better than they were one year ago, when virtually the entire state was in at least severe drought, with more than 80% in extreme drought conditions. NOAA forecasts conditions may improve in much of the state this summer.

MORE: The heaviest drinking countries in the world

2. Nevada

> Pct. severe drought: 87.0%
> Pct. extreme drought: 38.7% (5th highest)
> Pct. exceptional drought: 8.2% (4th highest)

Nearly 40% of Nevada was covered in extreme drought last week, among the highest rates in the country. The drought in the state has worsened since the week of April 15, when 33.5% of the state was covered in extreme drought. According to the Las Vegas Valley Water District (LVVWD), the main cause of the drought this year has been below average snowfall in the Rocky Mountains. Melting snow from the Rocky Mountains eventually flows into Lake Mead, which provides most of the Las Vegas Valley with water. John Entsminger, head of both the LVVWD and the Southern Nevada Water Authority, said that the effects of the drought on the state has been "every bit as serious as a Hurricane Katrina or a Superstorm Sandy."

MORE: World's most content (and miserable) countries

1. California

> ! Pct. severe drought: 100.0%
> Pct. extreme drought: 76.7% (the highest)
> Pct. exceptional drought: 24.8% (2nd highest)

California had the nation's worst drought problem with more than 76% of the state experiencing extreme drought as of last week. Drought in California has worsened considerably in recent years. Severe drought conditions covered the entire state, as of last week. Governor Jerry Brown declared a state of emergency earlier this year as the drought worsened. California had 465,422 hired farm workers in 2012, more than any other state. Farm workers would likely suffer further if conditions persist. The shortage of potable water has been so severe that California is now investing in long-term solutions, such as desalination plants. A facility that is expected to be the largest in the Western hemisphere is currently under construction in Southern California, and another desalination facility is under consideration in Orange County.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Sunday, May 25, 2014

4 Stocks Rising on Unusual Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Hated Earnings Stocks You Should Love

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Rocket Stocks Ready for Blastoff

With that in mind, let's take a look at several stocks rising on unusual volume recently.

Maxwell Technologies

Maxwell Technologies (MXWL), together with its subsidiaries, develops, manufactures and markets energy storage and power delivery products worldwide. This stock closed up 6.5% to $16.64 in Wednesday's trading session.

Wednesday's Volume: 1.62 million

Three-Month Average Volume: 1.04 million

Volume % Change: 115%

From a technical perspective, MXWL ripped higher here right above some near-term support at $15.05 with above-average volume. This move pushed shares of MXWL into breakout and new 52-week-high territory, since this stock cleared or flirted with some near-term overhead resistance levels at $16.33 to $17.02. Market players should now look for a continuation move to the upside in the short-term if MXWL manages to take out its new 52-week high at $17.15 with strong volume.

Traders should now look for long-biased trades in MXWL as long as it's trending above Wednesday's low of $16.16 or above more support at $15.05 and then once it sustains a move or close above $17.15 with volume that hits near or above 1.04 million shares. If we get that move soon, then MXWL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $20 to $22.

Covenant Technologies

Covenant Technologies (CVTI), together with its subsidiaries, offers truckload transportation and brokerage services in the continental U.S. This stock closed up 10.2% to $10.84 in Wednesday's trading session.

Wednesday's Volume: 84,000

Three-Month Average Volume: 52,581

Volume % Change: 50%

From a technical perspective, CVTI ripped sharply higher here back above its 50-day moving average of $10.21 with above-average volume. This move pushed shares of CVTI into breakout territory, since this stock took out some near-term overheard resistance levels at $10.07 to $10.45. This sharp spike higher on Wednesday is quickly pushing shares of CVTI within range of triggering another breakout trade. That trade will hit if CVTI manages to take out some near-term overhead resistance at $11 with high volume.

Traders should now look for long-biased trades in CVTI as long as it's trending above Wednesday's low of $9.96 or above $9.50 and then once it sustains a move or close above $11 with volume that hits near or above 52,581 shares. If that breakout triggers soon, then CVTI will set up to re-test or possibly take out its next major overhead resistance levels at $11.97 to its 52-week high at $12.29.

Interval Leisure Group

Interval Leisure Group (IILG), together with its subsidiaries, provides membership and leisure services to the vacation industry in the U.S., the U.K. and internationally. This stock closed up 2.6% at $19.61 in Wednesday's trading session.

Wednesday's Volume: 678,000

Three-Month Average Volume: 257,869

Volume % Change: 145%

From a technical perspective, IILG spiked notably higher here right above its recent 52-week low of $18.96 with above-average volume. This stock recently gapped down sharply from over $25 to under $21 with heavy downside volume. Following that move, shares of IILG continued to slide lower and the stock hit a new 52-week low of $18.96. That said, shares of IILG are now starting to rebound off that $18.96 low and off extremely oversold levels, since its current relative strength index reading is 22.54. Oversold can always get more oversold, but it's also an area where a stock can make a powerful bounce higher from.

Traders should now look for long-biased trades in IILG as long as it's trending above its 52-week low of $18.96 and then once it sustains a move or close above Wednesday's intraday high of $20.23 to some more near-term overhead resistance at $21.39 with volume that hits near or above 257,869 shares. If that move gets underway soon, then IILG will set up for a potential powerful rebound back towards its 50-day moving average of $24.99 or its 200-day moving average of $25.42.

Xylem

Xylem (XYL) is engaged in the design, manufacture and application of engineered technologies for the water and wastewater application. This stock closed up 1.4% at $37.82 in Wednesday's trading session.

Wednesday's Volume: 2.06 million

Three-Month Average Volume: 1.07 million

Volume % Change: 125%

From a technical perspective, XYL trended modestly higher here right above its 50-day moving average of $36.45 with above-average volume. This move is quickly pushing shares of XYL within range of triggering a major breakout trade. That trade will hit if XYL manages to take out some near-term overhead resistance levels at $38.37 to its 52-week high at $39.79 with high volume.

Traders should now look for long-biased trades in XYL as long as it's trending above its 50-day at $36.45 or above more near-term support at $36.20 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.07 million shares. If that breakout kicks off soon, then XYL will set up to enter new 52-week-high territory above $39.79, which is bullish technical price action. Some possible upside targets off that breakout are $45 to $50.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

Can Caterpillar Inc Continue to Push Higher?

There is no question that Caterpillar's (NYSE: CAT ) performance so far this year has been impressive. The company's shares have surged, rising nearly 16%.

The company has also outperformed almost all of its peers, including smaller peer Joy Global (NYSE: JOY ) , which has seen its shares go nowhere during the past five months.

The question is, will Caterpillar's impressive performance continue?

Impressive first quarter
Caterpillar's performance so far the year can be traced back to a solid set of first quarter numbers. The company's earnings per share for the first quarter came in at $1.61, beating forecasts for EPS of $1.23. What's more, the company revised full-year guidance higher.

Caterpillar now expects to earn $6.10 per share during 2014, up from the figure of $5.81 previously expected.

These good results are attributable to strong performance from Caterpillar's construction and power systems divisions. Unfortunately, the company's main business, manufacturing mining equipment, continues to perform poorly.

Indeed, Caterpillar's own management stated on the first quarter earnings call that the company continues to see low order rates for mining equipment:

The company expects mining orders will begin to improve at some point, but not likely in time to increase Resource Industries' sales in 2014

The power systems and construction side of Caterpillar's' business only account for around 23% of the company's overall revenue, the rest is dependent on mining equipment orders. So, while the company may be reaping the benefits from an economic recovery within the U.S. now, it will be unable to stage a full recovery until capital spending within the mining industry recovers.

Unfortunately, many analysts believe that the market for mining capital equipment will continue to contract at a rate of around 10% per annum in the near future. Some estimates claim that the market will return to growth during 2016, but there are some conflicting views on the matter; ultimately the mining industry is dependent on global economic growth.

While this is bad news for Caterpillar, the company's power and construction businesses are taking up some of the slack. Joy Global, however, is more of a pure-play mining equipment producer, and the company is likely to suffer more than its larger peer.

Bad news for Joy
Not only is Joy Global a pure-play mining equipment company, the company also specializes in the production of equipment for coal mining. With both the price of coal and demand for mining equipment slumping since the financial crisis, Joy has been hit hard.

That being said, there are some signs developing within the coal market that point to a recovery, a relief for Joy. Actually, thanks to the harsh weather conditions in the U.S. this past winter, coal reserves have hit a low not seen since the 90's, and this should work in Joy's favor.

Indeed, when Joy reported its fiscal first quarter earnings results, management highlighted the fact that the global coal market was seeing a recovery in China and India, but the U.S. was yet to see a recovery. Hopefully, with inventories falling to low levels demand for coal mining equipment within the U.S. should rise, boosting Joy's outlook.

Still, even if the coal market is not ready to stage a cyclical upswing just yet, Joy's aftermarket services division is expected to generate $650 million per quarter for the company, easily enough to cover the company's dividend payout and stock repurchase program. Joy is planning to buy back $1 billion of stock, 17% of its outstanding shares over 36 months, and currently offers a 1.2% dividend yield.

Valuation
One thing that worries me about Caterpillar is the company's currently valuation. In particular, Caterpillar currently trades at a forward P/E of 17.2, based on the figures above.

A forward P/E of 17.2 is a relatively high valuation, especially considering the fact that Caterpillar's main market, the mining industry, is still contracting. Additionally, Caterpillar's smaller peers all trade at P/E ratios in the low-teens.

All in all, Caterpillar looks expensive considering the mining industry is still contracting and when compared to the valuation of its peers.

Foolish summary
So overall, Caterpillar's shares have put in a good year-to-date performance, but this may not continue. Firstly, the company will not be able to return to full health until mining industry capex begins to recover again. And secondly, the company is currently trading at a higher than average valuation.

Unless the company can continue to grow sales at its construction and power systems business faster than its mining business is contracting, it is likely that Caterpillar is due for a correction sometime soon.

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